Interim Results
Murray International Trust PLC
23 August 2007
MURRAY INTERNATIONAL TRUST PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007
The Directors of Murray International Trust PLC report the unaudited results of
the Company for the six months ended 30 June 2007.
Background
Global equity markets were surprisingly strong over the past six months as
investors ignored worrying economic trends concentrating instead on surging
merger and acquisition activity. The pessimism that prevailed in global fixed
income markets, based on fears over inflation and deteriorating asset quality in
the US housing market, was not replicated in equity markets. Despite adverse
headwinds from rising interest rates and faltering corporate profitability, many
markets produced above average returns. Over the period, in sterling terms, the
most notable returns came from Continental Europe, Asia and Brazil up 11.4%,
15.4% and 31.3% respectively. Continued weakness in the US dollar and the Yen
constrained returns from the United States and Japan in sterling terms. Within
a global context, the UK return of 8.3% was a satisfactory performance.
Performance
The Net Asset Value total return, with net income reinvested, for the six months
to 30 June 2007 was 6.6% compared with a return of 7.7% on the Trust's benchmark
(40% of the FTSE World UK and 60% of the FTSE World ex UK Indices).
The negative contribution from our positions in Japanese and fixed income
securities outweighed the positive impact of the low level of our investment in
the USA being replaced by a greater than average commitment to the smaller Asian
markets. Given the widespread global diversification of the total portfolio, the
relentless rise of sterling against most foreign currencies continued to
constrain returns from overseas markets.
Dividends
In accordance with shareholder approved procedures, the Board announced on 7
August a second interim dividend of 4.3p, payable on 15 November 2007. This
represents a 13.2% increase on the second interim dividend distributed for the
same period twelve months ago, and continues the objective of reducing the
disparity between the interims and the final dividend. The Board intends to
recommend that the final dividend in respect of the year ending 31 December
2007, payable in May 2008, will not be less than 7.60p.
VAT on Management Fees
The Board has been watching carefully developments in the 'Claverhouse' case in
which the Association of Investment Companies ('AIC'), in conjunction with
JPMorgan Claverhouse Investment Trust PLC, has been seeking to bring the rules
relating to the payment of VAT on management fees by investment trusts into line
with the rules for other collective investment schemes, such as open ended
investment companies whose management fees do not attract VAT. The European
Court of Justice has delivered its judgement that the fees associated with the
management of an investment trust in the UK should be exempt from VAT. We
understand that the case will now be referred back to the VAT and Duties
Tribunal in the UK for final determination. The Board has taken appropriate
steps to protect the Trust's position.
Outlook
At this point in the business cycle, history suggests that risks associated with
inappropriate policy actions are rising. The high volatility in markets since
30 June 2007 indicates that many investors are now recognising this. Tighten too
much and risk tipping the economy into recession: loosen policy too quickly and
risk losing the respect of the bond market. The United States and the UK are
both facing such difficult decisions in the coming months. Thankfully,
elsewhere in the world, the prospects are much brighter. The enormous savings
pool that currently exists in Asia and the Emerging Markets is providing
numerous domestic economic growth opportunities in countries which previously
were wholly dependent on exports. With domestic expansion comes new investment
possibilities in growth sectors such as finance, construction, transportation
and telecommunications. As global growth becomes more geographically diverse,
so too has the asset allocation of your Company, capitalising on the breadth and
depth of high quality, strongly managed companies in various growth businesses
throughout the world. Accordingly, we feel well positioned to benefit once the
markets have settled down.
J F H Trott
Chairman
23 August 2007
Income Statement
Six months ended
30 June 2007
(unaudited)
Revenue Capital Total
£'000 £'000 £'000
Gains on investments - 25,796 25,796
Income from investments 14,530 - 14,530
Other income - - -
Investment management fees (483) (1,127) (1,610)
Performance fees - 314 314
Other expenses (606) - (606)
Currency losses - (2,091) (2,091)
_______ _______ _______
Net return before finance costs and taxation 13,441 22,892 36,333
Finance costs of borrowing (298) (696) (994)
_______ _______ _______
Return on ordinary activities before tax 13,143 22,196 35,339
Tax on ordinary activities (2,788) 1,965 (823)
_______ _______ _______
Return attributable to equity Shareholders 10,355 24,161 34,516
_______ _______ _______
Return per Ordinary share (pence) 12.0 27.9 39.9
_______ _______ _______
Return per Ordinary share assuming full 11.8 27.6 39.4
conversion of the B Ordinary shares (pence)
_______ _______ _______
The total column of the statement represents the profit and loss of the Company.
All revenue and capital items in the above statement derive from continuing
operations.
No operations were acquired or discontinued during the year.
The Company has no other gains or losses other than those recognised in the
Income Statement above.
Ordinary dividends on equity shares (£'000)* 6,580 - 6,580
_______ _______ _______
* The apparent drop in dividends when comparing interim periods for 2007 and
2006 is due to the Company now declaring interim dividends quarterly instead of
announcing all three interim dividends at the start of the year.
Income Statement
Six months ended
30 June 2006
(unaudited)
Revenue Capital Total
£'000 £'000 £'000
Gains on investments - 6,124 6,124
Income from investments 13,794 - 13,794
Other income 35 - 35
Investment management fees (437) (1,020) (1,457)
Performance fees - (477) (477)
Other expenses (617) - (617)
Currency losses - (1,884) (1,884)
_______ _______ _______
Net return before finance costs and taxation 12,775 2,743 15,518
Finance costs of borrowing (311) (726) (1,037)
_______ _______ _______
Return on ordinary activities before tax 12,464 2,017 14,481
Tax on ordinary activities (2,473) 1,567 (906)
_______ _______ _______
Return attributable to equity Shareholders 9,991 3,584 13,575
_______ _______ _______
Return per Ordinary share (pence) 11.5 4.1 15.6
_______ _______ _______
Return per Ordinary share assuming full 11.4 4.1 15.5
conversion of the B Ordinary shares (pence)
_______ _______ _______
The total column of the statement represents the profit and loss of the Company.
All revenue and capital items in the above statement derive from continuing
operations.
No operations were acquired or discontinued during the year.
The Company has no other gains or losses other than those recognised in the
Income Statement above.
Ordinary dividends on equity shares (£'000)* 15,623 - 15,623
_______ _______ _______
* The apparent drop in dividends when comparing interim periods for 2007 and
2006 is due to the Company now declaring interim dividends quarterly instead of
announcing all three interim dividends at the start of the year.
Income Statement
Year ended
31 December 2006
(audited)
Revenue Capital Total
£'000 £'000 £'000
Gains on investments - 61,182 61,182
Income from investments 24,566 - 24,566
Other income - - -
Investment management fees (910) (2,124) (3,034)
Performance fees - (2,565) (2,565)
Other expenses (1,313) - (1,313)
Currency losses - (4,087) (4,087)
_______ _______ _______
Net return before finance costs and taxation 22,343 52,406 74,749
Finance costs of borrowing (610) (1,424) (2,034)
_______ _______ _______
Return on ordinary activities before tax 21,733 50,982 72,715
Tax on ordinary activities (4,603) 3,147 (1,456)
_______ _______ _______
Return attributable to equity Shareholders 17,130 54,129 71,259
_______ _______ _______
Return per Ordinary share (pence) 19.8 62.5 82.3
_______ _______ _______
Return per Ordinary share assuming full 19.5 61.8 81.3
conversion of the B Ordinary shares (pence)
_______ _______ _______
The total column of the statement represents the profit and loss of the Company.
All revenue and capital items in the above statement derive from continuing
operations.
No operations were acquired or discontinued during the year.
The Company has no other gains or losses other than those recognised in the
Income Statement above.
Ordinary dividends on equity shares (£'000) 15,623 - 15,623
_______ _______ _______
Balance Sheet
As at As at As at
30 June 30 June 31 December 2006
2007 2006
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Non-current assets
Investments at fair value through profit or loss 673,859 609,231 655,634
Current assets
Debtors 5,855 4,637 3,694
Cash and short-term deposits 1,569 998 3,870
_______ _______ _______
7,424 5,635 7,564
_______ _______ _______
Creditors: amounts falling due within one year
Bank loans (16,749) - -
Other creditors (4,149) (11,821) (8,167)
_______ _______ _______
(20,898) (11,821) (8,167)
_______ _______ _______
Net current liabilities (13,474) (6,186) (603)
_______ _______ _______
Total assets less current liabilities 660,385 603,045 655,031
Creditors: amounts falling due after more than one year
Loans (51,262) (79,423) (72,159)
Other creditors (1,919) (2,037) (3,604)
_______ _______ _______
(53,181) (81,460) (75,763)
_______ _______ _______
Net assets 607,204 521,585 579,268
_______ _______ _______
Capital and reserves
Equity Shareholders' interests:
Called-up share capital 21,922 21,919 21,919
Share premium account 22 23 22
Capital redemption reserve 8,230 8,230 8,230
Capital reserve - realised 312,911 299,758 298,874
Capital reserve - unrealised 226,692 165,142 216,571
Revenue reserve 37,427 26,513 33,652
_______ _______ _______
Equity Shareholders' funds 607,204 521,585 579,268
_______ _______ _______
Net Asset Value per Ordinary and B Ordinary share (pence) 692.4 594.9 660.7
_______ _______ _______
Reconciliation of Movements in Shareholders' Funds
Six months ended 30 June 2007
(unaudited)
Share Capital Capital Capital
Share premium redemption reserve reserve Revenue
capital account reserve realised unrealised reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 31 December 2006 21,919 22 8,230 298,874 216,571 33,652 579,268
Return on ordinary activities after - - - 14,040 10,121 10,355 34,516
taxation
Dividends paid (see note 2) - - - - - (6,580) (6,580)
Issue of new shares 3 - - (3) - - -
_______ _______ _______ _______ _______ _______ _______
Balance at 30 June 2007 21,922 22 8,230 312,911 226,692 37,427 607,204
_______ _______ _______ _______ _______ _______ _______
Six months ended 30 June 2006
(unaudited)
Share Capital Capital Capital
Share premium redemption reserve - reserve - Revenue
capital account reserve realised unrealised reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 31 December 2005 21,911 23 8,230 286,597 174,727 32,145 523,633
Return on ordinary activities after - - - 13,169 (9,585) 9,991 13,575
taxation
Dividends paid (see note 2) - - - - - (15,623) (15,623)
Issue of new shares 8 - - (8) - - -
_______ _______ _______ _______ _______ _______ _______
Balance at 30 June 2006 21,919 23 8,230 299,758 165,142 26,513 521,585
_______ _______ _______ _______ _______ _______ _______
Year ended 31 December 2006
(audited)
Share Capital Capital Capital
Share premium redemption reserve - reserve - Revenue
capital account reserve realised unrealised reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 31 December 2005 21,911 23 8,230 286,597 174,727 32,145 523,633
Return on ordinary activities after - - - 12,285 41,844 17,130 71,259
taxation
Dividends paid (see note 2) - - - - - (15,623) (15,623)
Issue of new shares 8 (1) - (8) - - (1)
_______ _______ _______ _______ _______ _______ _______
Balance at 31 December 2006 21,919 22 8,230 298,874 216,571 33,652 579,268
_______ _______ _______ _______ _______ _______ _______
Cash Flow Statement
Six months ended Six months ended Year
ended
30 June 2007 30 June 2006 31 December 2006
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Net return before finance costs and taxation 36,333 15,518 74,749
Adjustments for:
Realised gains on investments (20,056) (17,470) (25,909)
Unrealised (gains)/losses on investments (5,740) 11,346 (35,273)
Amortisation of fixed income book cost 281 265 558
Effect of foreign exchange losses 2,091 1,884 4,087
Increase in accrued income (2,060) (1,252) (344)
(Increase)/decrease in other debtors (4) 28 (48)
(Decrease)/increase in other creditors (2,185) (557) 1,559
Overseas tax suffered (920) (1,048) (1,500)
______________ ______________ ______________
Net cash inflow from operating activities 7,740 8,714 17,879
Returns on investment and servicing of finance
Interest paid (989) (1,170) (2,233)
______________ ______________ ______________
Net cash outflow from servicing of finance (989) (1,170) (2,233)
Financial investment
Purchases of investments (69,126) (54,612) (100,174)
Sales of investments 76,416 54,343 108,267
______________ ______________ ______________
Net cash inflow/(outflow) from financial investment 7,290 (269) 8,093
Equity dividends paid (9,869) (8,826) (15,404)
______________ ______________ ______________
Net cash inflow/(outflow) before financing 4,172 (1,551) 8,335
Financing
Expense of share issue - - (1)
Loans repaid - (7,707) (7,708)
Loans received - 7,707 7,708
______________ ______________ ______________
Net cash flow from financing - - (1)
______________ ______________ ______________
Increase/(decrease) in cash 4,172 (1,551) 8,334
______________ ______________ ______________
Analysis of changes in cash during the period
Opening balance 3,870 6,816 6,816
Increase/(decrease) in cash as above 4,172 (1,551) 8,334
Currency differences (6,473) (4,267) (11,280)
______________ ______________ ______________
Closing balances 1,569 998 3,870
______________ ______________ ______________
MURRAY INTERNATIONAL TRUST PLC
Six months ended 30 June 2006
Supplementary Information
Note 1 Transaction Costs
During the six months ended 30 June 2007 expenses were incurred in acquiring or
disposing of investments classified as fair value through profit or loss. These
have been expensed through capital and are included within gains on investments
in the Income Statement. The total costs were as follows:
Six months ended Six months ended Year ended
30 June 2007 30 June 2006 31 December 2006
£'000 £'000 £'000
Purchases 121 80 147
Sales 139 95 159
___________ ___________ ___________
260 175 306
___________ ___________ ___________
Note 2 Ordinary dividends on equity shares
Six months Six months Year
ended ended ended
30 June 30 June 31 December 2006
2007 2006
£'000 £'000 £'000
2006 final dividend of 7.60p (2005 - 6.65p) 6,580 5,756 5,756
First interim dividend 2006 of 3.80p - 3,289 3,289
Second interim dividend 2006 of 3.80p - 3,289 3,289
Third interim dividend 2006 of 3.80p - 3,289 3,289
________ ________ ________
6,580 15,623 15,623
________ ________ ________
A first interim dividend for 2007 of 4.30p (2006 - 3.80p) was paid on 14 August
2007 (2006 - 14 August 2006) to Shareholders on the register on 6 July 2007. The
ex-dividend date was 4 July 2007.
A second interim dividend for 2007 of 4.30p (2006 - 3.80p) will be paid on 15
November 2007 (2006 - 15 November 2006) to Shareholders on the register on 5
October 2007. The ex-dividend date is 3 October 2007.
In accordance with UK Generally Accepted Accounting Practice (UK GAAP) these are
not recognised in these financial statements.
Note 3 Returns per share
Six months ended Six months ended Year ended
30 June 30 June 31 December
2007 2006 2006
£'000 £'000 £'000
The returns per share have been based
on the following figures:
Revenue return 10,355 9,991 17,130
Capital return 24,161 3,584 54,129
______________ ______________ ______________
Total return 34,516 13,575 71,259
______________ ______________ ______________
Weighted average number of Ordinary 86,584,151 86,556,277 86,570,172
shares
Weighted average number of B Ordinary 1,095,495 1,094,729 1,093,746
shares
Note 4 Diluted net asset value
The diluted Net Asset Value per share and the net asset value attributable to
the Ordinary shares (including conversion of the B Ordinary shares), at the
period end calculated in accordance with the Articles of Association were as
follows:
As at As at As at
30 June 30 June 31 December
2007 2006 2006
£'000 £'000 £'000
Attributable net assets 607,204 521,585 579,268
______________ ______________ ______________
Number of shares in issue:
Ordinary shares 86,612,772 86,583,992 86,583,992
B Ordinary shares 1,076,598 1,092,806 1,092,806
______________ ______________ ______________
87,689,370 87,676,798 87,676,798
______________ ______________ ______________
Note 5
The financial information in this report comprises non-statutory accounts within
the meaning of Section 240 of the Companies Act 1985. The financial information
for the year ended 31 December 2006 has been extracted from published accounts
that have been delivered to the Registrar of Companies and on which the report
of the auditors was unqualified under Section 235 of the Companies Act 1985. The
interim accounts have been prepared using the same accounting policies as the
preceding annual accounts.
Note 6
A summary of investment changes for the six months to 30 June 2007, a summary of
net assets as at 30 June 2007 and a schedule of the twenty largest equity
investments and the ten largest fixed income investments as at 30 June 2007 are
attached.
By order of the Board
ABERDEEN ASSET MANAGEMENT PLC, SECRETARY
23 August 2007
The Interim Report will be printed and issued to shareholders and further copies
will be available to the public at the registered office of the Company, 97
Haymarket Terrace, Edinburgh EH12 5HD.
Summary of Investment Changes
Valuation Appreciation/ Valuation
31 December 2006 Transactions (depreciation) 30 June 2007
£'000 % £'000 £'000 £'000 %
Equities
United Kingdom 151,209 23.1 (29,805) 7,628 129,032 19.1
North America 46,259 7.0 3,153 2,118 51,530 7.6
Europe Ex UK 101,050 15.4 (3,590) 7,612 105,072 15.5
Japan 77,883 11.9 (3,453) (950) 73,480 10.9
Asia Pacific Ex Japan 117,725 18.0 293 5,394 123,412 18.2
Emerging Europe & Latin America 73,873 11.3 1,660 6,038 81,571 12.0
_______ _______ _______ _______ _______ _______
567,999 86.7 (31,742) 27,840 564,097 83.3
Fixed income _______ _______ _______ _______ _______ _______
United Kingdom 57,512 8.8 17,354 (1,804) 73,062 10.8
North America 11,617 1.8 6,873 (453) 18,037 2.7
Europe Ex UK 4,765 0.7 16 157 4,938 0.7
Asia Pacific Ex Japan 7,553 1.2 (17) 89 7,625 1.1
Latin America 6,188 0.9 (55) (33) 6,100 0.9
_______ _______ _______ _______ _______ _______
87,635 13.4 24,171 (2,044) 109,762 16.2
_______ _______ _______ _______ _______ _______
Other net current assets/(liabilities)* (603) (0.1) 10,117 (6,239) 3,275 0.5
_______ _______ _______ _______ _______ _______
Total assets less current liabilities 655,031 100.0 2,546 19,557 677,134 100.0
_______ _______ _______ _______ _______ _______
* Excluding short term bank loans of £16,749,000 (31 December 2006 - £nil)
Valuation
30 June 2007
£'000 %
Equities 564,097 92.9
Fixed income 109,762 18.1
Other net assets 3,275 0.5
Prior charges (68,011) (11.2)
Other long term liabilities (1,919) (0.3)
_________ _________
Equity Shareholders' funds 607,204 100.0
_________ _________
Twenty Largest Equity Investments
As at 30 June 2007
Valuation % of total
Security Investment area £'000 assets
Atrium Underwriting United Kingdom 25,139 3.7
Petrobras Brazil & Argentina 21,249 3.1
Resolution United Kingdom 20,032 3.0
Tenaris ADR Mexico 19,498 2.9
British American Tobacco* United Kingdom & Malaysia 15,153 2.2
PetroChina China 10,959 1.6
Aeroportuario del Sureste ADS Mexico 10,489 1.5
Vodafone Group United Kingdom 9,397 1.4
Weir Group United Kingdom 9,125 1.3
Souza Cruz Brazil 8,986 1.3
PTT Exploration & Production Thailand 8,495 1.3
E.ON Germany 8,343 1.2
ICICI Bank India 8,178 1.2
Telecomunicacoes de Sao Paulo Brazil 8,097 1.2
Orix Corporation Japan 8,095 1.2
Intesa Sanpaolo Italy 8,025 1.2
BT Group United Kingdom 7,980 1.2
Reynolds American United States of America 7,792 1.2
Swire Pacific B Hong Kong 7,426 1.1
Altria Group United States of America 7,332 1.1
_________ _________
Top twenty investments 229,790 33.9
_________ _________
* Consolidates all equity holdings from same issuer.
Ten Largest Fixed Income Investments
As at 30 June 2007
Security Currency Valuation % of total assets
Denomination £'000
UK Treasury 7.25% 07/12/2007 Sterling 7,039 1.0
UK Treasury 5% 07/03/2008 Sterling 6,971 1.0
US Treasury Notes 4.5% 15/05/2017 US Dollar 6,929 1.0
UK Treasury 4% 07/03/2009 Sterling 6,805 1.0
UK Treasury 5% 07/03/2012 Sterling 6,801 1.0
UK Treasury 4.75% 07/09/2015 Sterling 6,738 1.0
UK Treasury 4% 07/09/2016 Sterling 6,716 1.0
UK Treasury 6.25% 25/11/2010 Sterling 6,593 1.0
UK Treasury 9% Conversion 12/07/2011 Sterling 6,461 1.0
Mexico (Government of) 10.5% 14/07/2011 Mexican Peso 6,100 0.9
_________ _________
Top ten investments 67,153 9.9
_________ _________
Independent Review Report to Murray International Trust PLC
Introduction
We have been instructed by the Company to review the financial information for
the six months ended 30 June 2007 which comprises the Income Statement, Balance
Sheet, Reconciliation of Movements in Shareholders' Funds, Cash Flow Statement
and related notes 1 to 6. We have read the other information contained in the
Interim Report and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.
This report is made solely to the Company in accordance with guidance contained
in Bulletin 1999/4 'Review of interim financial information' issued by the
Auditing Practices Board. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the Company, for our work,
for this report, or for the conclusions we have formed.
Directors' Responsibilities
The Interim Report, including the financial information contained therein, is
the responsibility of, and has been approved by, the Directors. The Directors
are responsible for preparing the Interim Report in accordance with the Listing
Rules of the Financial Services Authority, which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
'Review of interim financial information' issued by the Auditing Practices Board
for use in the United Kingdom. A review consists principally of making enquiries
of management and applying analytical procedures to the financial information
and underlying financial data and, based thereon, assessing whether the
accounting policies and presentation have been consistently applied, unless
otherwise disclosed. A review excludes audit procedures such as tests of
controls and verification of assets, liabilities and transactions. It is
substantially less in scope than an audit performed in accordance with United
Kingdom Auditing Standards and therefore provides a lower level of assurance
than an audit. Accordingly we do not express an audit opinion on the financial
information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2007.
Ernst & Young LLP
Edinburgh
23 August 2007
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